Today, Delta Air Lines CEO Ed Bastian sent a memo to all employees worldwide announcing that any employee who is unvaccinated will have to pay $200 dollars more every month for health insurance.

Bastion’s memo is posted on Delta’s website and states in part:

  • Effective immediately, unvaccinated employees are required to wear masks in all indoor Delta settings. This requirement will remain in place until community case rates stabilize.
  • Starting Sept. 12, any U.S. employee who is not fully vaccinated will be required to take a COVID test each week while community case rates are high. Those with a positive result will need to isolate and remain out of the workplace.
  • Beginning Nov. 1, unvaccinated employees enrolled in Delta’s account-based healthcare plan will be subject to a $200 monthly surcharge. The average hospital stay for COVID-19 has cost Delta $50,000 per person. This surcharge will be necessary to address the financial risk the decision to not vaccinate is creating for our company. In recent weeks since the rise of the B.1.617.2 variant, all Delta employees who have been hospitalized with COVID were not fully vaccinated.
  • Effective Sept. 30, in compliance with state and local laws, COVID pay protection will only be provided to fully vaccinated individuals who are experiencing a breakthrough infection.

Emphasis Added

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Photo by Olya Kobruseva

My Take

As an initial observation, it is interesting that Delta, which shares a name with the virulent Delta Covid variant, only refers to that variant by its technical name, B.1.617.2. I guess referring to the Delta variant is a touchy subject at Delta.

More importantly, Delta is the first company I’ve heard of to add a surcharge to the healthcare premiums of its employees. Such a penalty will be a big incentive for all of its employees to get vaccinated. Delta says that 75% of its employees worldwide have already received a vaccine.

This move by Delta management appears to be legal. Unlike most of the airline industry, Delta’s workforce is nonunion. In the U.S., employers rarely have the ability to make changes unilaterally in the terms and conditions of employment for unionized workers who are covered by a labor agreement.

Delta has successfully rebuffed recent unionization attempts. Imposing healthcare surcharges and making the other changes in terms and conditions of work noted in the memo is a risk for Delta because it might cause some employees to reevaluate their position on unionization. Incurring that risk underscores the great value Delta places on having a vaccinated workforce.

It is unclear to me how Delta estimated it costs at $50,000 per Covid hospital stay. Delta employees are insured through United Healthcare. Normally, insurers set premiums at the beginning of a plan year based on last year’s claims, any changes in coverage, and predictions for future use and costs.

Fully insured employers usually aren’t on the hook for additional costs within a plan year. Delta may self insure some of its healthcare costs and that may be where it incurs costs for Covid stays. Fifty-thousand dollars certainly would not cover the total cost of most Covid hospital stays in the U.S..

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Cockpit of Delta A220-100 at Dallas-Fort Worth

An unexpected and beneficial side effect of the Covid pandemic is the moderating effect it has had on health insurance premiums. Insurers expect health care utilization to remain lower than usual overall as people observe masking and social distancing measures and skip or postpone routine or elective procedures. Perhaps when people are able to receive the procedures they’ve skipped during the pandemic health insurance premiums may skyrocket.

It is also unclear how after Sept, 30 Delta plans to provide legally mandated Covid pay protection only to vaccinated workers and require them to utilize any sick days they have after that date.

After the federal Families First Coronavirus Response Act (FFCRA) expired along with its mandate for employers to provide paid sick leave, state and local lawmakers around the country passed a plethora of laws and mandates requiring employers to pay workers who are sick, need to isolate or quarantine, or are seeking COVID-19 testing or vaccination. These laws and mandates vary from jurisdiction to jurisdiction and would seem to be a compliance nightmare for employers with nationwide workforces.

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Delta One A350-900 business class suite

Other U.S. Airlines

On August 6, United Airlines announced that it was requiring all employees to be vaccinated by October 25, 2021 or risk termination. As reported by CNBC, Alaska Airlines earlier this month told employees that it was considering requiring employees to be vaccinated against Covid but that it would only do so after one of the vaccines received full approval. Frontier Airlines said this month that employees have to be vaccinated or test regularly for Covid. American Airlines, Southwest Airlines and JetBlue Airways have so far only encouraged employees to get vaccinated. I think other airlines will likely follow United and Delta and adopt more stringent vaccine requirements for their employees.

Final Thoughts

My view is that, while Delta’s announcement stops short of a vaccine mandate, it and just about anything that encourages more people to get vaccines that have received final FDA approval will help to end the pandemic and save thousands of lives.

With readily available, fully approved vaccines for people 12 and older that are virtually 100% effective at preventing death, just about every Covid death from here on out is totally preventable. It is downright shameful that the Covid death toll here that has already surpassed 620,000 American lives continues to mount.

What is your take on Delta’s announcement?

Hat Tip: Alphadolie